Social media company Meta (META) is cutting jobs in Reality Labs, the division behind its Quest headsets and Metaverse push. The layoffs are part of Meta’s ongoing cost-cutting strategy as it looks to sharpen its focus on future tech. This move follows Meta’s February layoffs, where 5% of staff were let go for underperformance.
While the company hasn’t shared exact numbers, the cuts are expected to impact teams within Oculus Studios, the unit that develops AR/VR content for Meta’s Quest devices, according to a company spokesperson. At the same time, employees working on the Supernatural VR fitness app are also among those affected.
Meta isn’t alone. Tech giants including Amazon (AMZN), Microsoft (MSFT), and Salesforce (CRM) have also announced layoffs in 2025, as they reallocate spending toward artificial intelligence (AI) and other high-growth areas.
Reality Labs Faces Tough Financial Reality
Reality Labs hasn’t been easy on Meta’s bottom line. Even with major investments in AI-powered glasses and virtual reality, the division is still far from profitable. In 2024 alone, it posted a staggering $17.7 billion in operating losses.
Zooming in on the latest quarter, the numbers don’t get any better. According to Main Street Data, Reality Labs’ operating loss widened to $4.97 billion in Q4 2024, slightly up from $4.65 billion from the year-ago quarter. Meanwhile, revenues grew modestly by 1.12% year-over-year to $1.1 billion in Q4 2024.
With losses this steep, questions around the long-term sustainability of Meta’s AR and VR bets are becoming more serious. That’s why the company’s recent move to cut costs and reshape Reality Labs makes sense.
If these steps help reduce financial strain, Meta could be in a better position to lead the metaverse race with a tighter, more focused strategy.
Is META a Good Investment for 2025?
Overall, Wall Street has a Strong Buy consensus rating on META stock based on 42 Buys, three Holds, and one Sell recommendation. The average META stock price target of $753 implies a 9.3% upside potential.
